West End performance of London office market

Driven in large part by West End lettings and the City investment market, the performance of the central London office market has improved significantly in the second quarter of 2002, according to DTZÂ's latest Central Offices Research report published this week.

The report paints a relatively upbeat picture of the second quarter with the value of investment transactions amounting to Â£2.2 billion in the second quarter up from Â£1.32 billion in the first. Investment purchases in the City totalled Â£1.32 billion up from only Â£375 million in the first quarter. The Mid Town market also saw a big rise in investor activity up from Â£74 million to Â£446 million in the second quarter.

In the lettings market, demand for space in the West End pushed up take-up by 150% in the second quarter to 0.15 million sq m (1.6 million sq ft). This increase was helped by a number of notable lettings including those to Lazards (totalling 13,015 sq m/140,000 sq ft) and Capital International (9,660 sq m/104,000 sq ft). Availability as a proportion of stock fell and now stands at 9.6%.

Take-up in the City was up slightly to 90,115 sq m (0.97 million sq ft) while availability rose by 13% in the second quarter to reach 0.59 million sq m (6.4 million sq ft), 8.4% of stock. In Mid Town take-up rose by 32% in the second quarter to total 0.05 million sq m (0.54 million sq ft). Docklands also experienced a recovery in letting activity â€“ up 16% on the first quarter to 33,450 sq m (0.36 million sq ft). Most of this was accounted for by the 19,975 sq m (215,000 sq ft) of option space taken at Canary Wharf by Clifford Chance.

Looking forward, rents are likely to come under further pressure as there has been a decline in active requirements which suggests that the demand for space over the next few months is likely to slow.